Mr. Rajasugumar Subramani, Bengaluru V. Income Tax Officer, International Taxation, Ward- 2(1), Bengaluru

ITA 2015/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8971 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B S BALACHANDRAN
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition
• Section: 54F; 72; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT ( IT) A NO. 2 015/ BANG / 2019 ASSESSMENT YEAR: 2013 - 14 SHRI RAJASUGUMAR SUBRAMANI, 56, FERNS CITY, OUTER RING ROAD, DODDANEKUNDI, BENGALURU 560 037. PAN: DA IP S 0 2 70 K VS. THE INCOME TAX OFFICER, WARD 2(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI B.S. BALACHANDRAN, ADVO CATE RESPONDENT BY : MS. PRIYADARSHINI MISRA, JT.C IT(DR)( ITAT ), BENGALURU. DATE OF HEARING : 01.01.2020 DATE OF PRONOUNCEMENT : 1 0 .01.2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 29.7.2019 OF THE CIT(APPEALS)-12, BENGALURU RELATING TO ASSESSME NT YEAR 2013-14. 2. THE ONLY ISSUE FOR CONSIDERATION IN THIS APPEAL IS AS TO, WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN DENYING THE C LAIM OF ASSESSEE FOR DEDUCTION U/S. 54/54F OF THE INCOME-TAX ACT, 1961 [ THE ACT]. IT(IT)A NO.2015/BANG/2019 PAGE 2 OF 7 3. THE ASSESSEE IS AN INDIVIDUAL. HE SOLD A SITE M EASURING 3903 SQ.FT. BEARING NO.53, CMC KHATHA NO.364, NEW BBMP KHATHA N O.396 IN SY.NO.19/1, FERNS CITY, DODDANEKUNDI VILLAGE, KRISH NARAJAPURA HOBLI, BANGALORE EAST TALUK [HEREINAFTER REFERRED TO AS T HE PROPERTY] UNDER SALE DEED DATED 05.11.2012 FOR A CONSIDERATION OF RS.2 C RORES. THE ASSESSEE CLAIMED DEDUCTION U/S. 54/54F OF THE ACT ON THE CAP ITAL GAIN ON SALE OF THE PROPERTY AS HE INVESTED THE CAPITAL GAIN IN PURCHAS E OF A RESIDENTIAL HOUSE IN TEXAS ON 12.7.2013. THE AO WENT INTO THE QUANTU M OF CAPITAL GAIN AND ALSO INTO THE QUESTION, WHETHER THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S. 54/54F OF THE ACT WHEN HE PURCHASED THE HOUSE OUTSIDE INDIA. THE AO FIRSTLYL EXPRESSED THE OPINION THAT THE SITE SOLD W AS A VACANT SITE AND THEREFORE DEDUCTION CANNOT BE CLAIMED U/S. 54 OF TH E ACT WHICH IS APPLICABLE ONLY WHEN THE CAPITAL ASSET SOLD IS A RESIDENTIAL A SSET. WITH REGARD TO THE DEDUCTION U/S. 54F OF THE ACT, THE AO WAS OF THE VI EW THAT THE SAID DEDUCTION IS NOT AVAILABLE TO INVESTMENT OF CAPITAL GAIN IN PURCHASE OF PROPERTY OUTSIDE INDIA. THE AO THEREFORE COMPUTED THE CAPITAL GAIN OF RS.1,89,50,133 ON SALE OF PROPERTY AS FOLLOWS:- (IN RUPEES) S A LE CONSIDERATION 2 ,00,00,000 LESS : EXPENSES 4 ,35,000 NET SALE CONSIDERATION 1 ,95,65, 000 LESS : COST OF ACQUISITION CONVERSION FEE AS DISCUSSED AT PARA 5.1 SALE PRICE, STAMP DUTY & REGISTRATION FEE AS DISCUSSED IN PARA 5.2 - 2,93,000 INDEXATION 293000 X 852/406 B ETTERMENT FEE AS DISCUSSED AT PARA 5.3 NIL 6,14,867 N IL LONG TER M CAPITAL GAIN 1 ,89,50,133 LESS: EXEMPTION U/S. 54F AS DISCUSSED AT PARA 6 N IL LONG TERM CAPIT AL GAIN TAXABLE 1,89,50,133 IT(IT)A NO.2015/BANG/2019 PAGE 3 OF 7 4. IN VIEW OF THE CONCLUSION THAT THE ASSESSEE WILL NOT BE ENTITLED TO DEDUCTION U/S. 54/54F OF THE ACT BECAUSE THE NEW AS SET PURCHASED WAS OUTSIDE INDIA, THE AO DID NOT ALLOW THE ASSESSEES CLAIM FOR DEDUCTION U/S. 54/54F OF THE ACT. 5. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONF IRMED THE ACTION OF THE AO IN NOT ALLOWING DEDUCTION U/S. 54/54F OF THE ACT. WITH REFERENCE TO THE QUANTUM OF CAPITAL GAIN COMPUTED BY THE AO, THE CIT(A) GAVE SOME RELIEF TO THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. CO UNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE BAN GALORE BENCH OF THE TRIBUNAL IN THE CASE OF ITO(IT), WARD 1(1), BANGALORE V. ARSHIA BASITH, IT(IT)A NO.2768/BANG/2017 AY 2014-15, ORDER DATED 1 4.8.2018 WHEREIN THIS TRIBUNAL HELD THAT ASSESSEE WOULD BE ENTITLED TO BENEFIT OF DEDUCTION U/S. 54/54F OF THE ACT ON THE PROPERTY PURCHASED OU TSIDE INDIA AND THAT THE AMENDMENT MADE TO SECTION 54F OF THE ACT BY THE FIN ANCE ACT, 2014 W.E.F. 2015 IS APPLICABLE ONLY PROSPECTIVELY FROM AY 2015- 16 AND NOT TO EARLIER ASSESSMENT YEAR. BY THE SAID AMENDMENT, THE PROVIS IONS OF SECTION 54F(1) WERE AMENDED WHEREBY IT WAS LAID DOWN THAT THE NEW ASSET PURCHASED OR CONSTRUCTED BY UTILISING THE CAPITAL GAIN MUST BE I N INDIA. HE ALSO RELIED ON THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE O F ACIT V. JAI KUMAR GUPTA HUF, ITA NO.5303/MUM/2017 AY 2013-14, ORDER D ATED 28.2.2019 AND DECISION OF ITAT BANGALORE IN THE CASE OF MRS. SUMA V. ITO, ITA NO.568/BANG/2018 FOR AY 2006-07, ORDER DATED 20.7.2 018 . IT WAS HELD THAT DEDUCTION U/S. 54F CAN BE CONSIDERED AND ALLOWED EV EN THOUGH THE ASSESSEE HAS MADE CLAIM FOR DEDUCTION ONLY U/S. 54 OF THE ACT PROVIDED THE CONDITIONS LAID DOWN IN SECTION 54F ARE SATISFIED. IT(IT)A NO.2015/BANG/2019 PAGE 4 OF 7 8. THE LD. DR SUBMITTED THAT THE ISSUE SHOULD BE DI RECTED TO BE EXAMINED BY THE AO AFRESH IN THE LIGHT OF DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE. 9. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS. WE FIND THAT IN THE DECISION RENDERED IN THE CASE OF JAI KUMAR GUPTA HUF (SUPRA) ON IDENTICAL FACTS THE ASSESSEE HAD MADE A CLAIM FO R DEDUCTION U/S. 54 OF THE ACT INSTEAD OF 54F OF THE ACT. THE TRIBU NAL HELD THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S. 54F SHOULD BE E XAMINED. IN THE CASE OF ARSHIA BASITH (SUPRA) THE BANGALORE BENCH OF THE TRIBUNAL HELD THAT ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S. 54F OF THE ACT EVEN IN RESPECT OF PROPERTY PURCHASED WHICH IS LOCATED OUTSIDE INDI A. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL:- 3. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHOR ITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSMENT YEAR IN THIS APPEAL IS 2014-15 AND THE PROVISION IN SECT ION 54F COMES W.E.F. 01.04.2015 ACCORDING TO WHICH IT WAS CLARIFI ED THAT THE RESIDENTIAL HOUSE IS TO BE ACQUIRED ONLY IN INDIA M EANING THEREBY BEFORE THIS AMENDMENT IT WAS NOT CLEAR AS TO WHETHE R THE BENEFIT OF SECTION 54F CAN BE GIVEN TO RESIDENTIAL HOUSE AC QUIRED IN INDIA OR ABROAD. THIS ISSUE WAS EXAMINED BY THE TRIBUNAL IN THE CASE OF ACIT VS. IQBAL JAFAR (SUPRA) WHICH WAS AUTHORED BY ONE OF THE MEMBERS OF THIS BENCH AND IT WAS HELD BY THE TRIBUN AL THAT BEFORE THE AMENDMENTS, THE BENEFIT CAN ALSO BE GIVE N TO THE RESIDENTIAL HOUSE ACQUIRED IN ABROAD. THE RELEVANT OBSERVATION OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 9. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BE LOW, FIND THAT IT HAS BEEN REPEATEDLY HELD BY THE HON'BLE APEX COURT AND VARIOUS HIGH COURTS THAT CARDINAL RULE OF INTERPRETATION IS THAT THE STATUTE MUST BE CONSTRUE D ACCORDING TO ITS PLAIN LANGUAGE AND NEITHER SHOULD ANYTHING BE ADDED NOR SUBTRACTED THEREFROM UNLESS T HERE ARE ADEQUATE GROUNDS TO JUSTIFY THE INFERENCE THAT THE LEGISLATURE CLEARLY SO INTENDED. IT IS ALSO WELL SE TTLED THAT IN A TAXING STATUTE ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY IT(IT)A NO.2015/BANG/2019 PAGE 5 OF 7 STATED THE MEANING AND EXTENT OF THE STATUTE MUST B E COLLECTED FROM THE PLAIN AND UNAMBIGUOUS EXPRESSION USED THEREIN, RATHER THAN FROM ANY NOTIONS WHICH MA Y BE ENTERTAINED BY THE COURT AS TO WHAT IS JUST OR EXPE DIENT. 10. IN THE CASE OF TV. SUNDARAM IYENGAR & SONS (P .) LTD. (SUPRA), THEIR LORDSHIPS HAVE HELD THAT IF THE LANGUAGE OF THE STATUTE IS CLEAR AND UNAMBIGUOUS, THE COURT CANNOT DISCARD THE PLAIN MEANING, EVEN IF IT LEADS TO AN I NJUSTICE. 11. AGAIN IN THE CASE OF SMT. TARULATA SHYAM V. CIT (SUPRA), IT WAS HELD THAT THERE IS NO SCOPE FOR IMP ORTING INTO THE STATUTE WORDS WHICH ARE NOT THERE. SUCH IMPORTATION WOULD BE, NOT TO CONSTRUE, BUT TO AMEND THE STATUTE. EVEN IF THERE BE A CASUS OMISSUS, THE DEFE CT CAN BE REMEDIED ONLY BY LEGISLATION AND NOT BY JUDICIAL INTERPRETATION. 12. FURTHER, IN THE CASE OF SODRA DEVI (SUPRA), IT WAS HELD BY THE HON'BLE APEX COURT THAT UNLESS THERE IS AN AMBIGUITY, IT WOULD NOT BE OPEN TO THE COURT TO DEP ART FROM THE NORMAL RULE OF CONSTRUCTION WHICH IS THAT THE INTENTION OF THE LEGISLATURE SHOULD BE PRIMARILY TO GATHER FROM THE WORDS WHICH ARE USED. IT IS ONLY WHEN THE WORDS USED ARE AMBIGUOUS THAT THEY WOULD STAND TO BE EXAM INED AND CONSIDERED ON SURROUNDING CIRCUMSTANCES AND CONSTITUTIONALLY PROPOSED PRACTICES. 13. WE HAVE ALSO EXAMINED THE ORDER OF THE TRIBUNAL IN THE CASE OF VINAY MISHRA (SUPRA), IN WH ICH IT HAS BEEN HELD THAT THE WORDS 'IN INDIA; CANNOT BE R EAD INTO SECTION 54F WHEN PARLIAMENT IN ITS LEGISLATIVE WISD OM HAS DELIBERATELY NOT USED THE WORDS 'IN INDIA' IN SECTI ON 54F OF THE ACT. THE TRIBUNAL ACCORDINGLY HELD THAT ASSESSEE 'S CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT SHA LL BE ALLOWED SINCE ALL CONDITIONS LAID DOWN IN THIS SECT ION ARE SATISFIED FOR AVAILING THE SAID EXEMPTION, THOUGH H E HAS ACQUIRED HOUSE PROPERTY IN U.S.A. 14. SIMILARLY IN THE CASE OF MRS. PREMA P. SHAH (SUPRA), THE TRIBUNAL HAS AGAIN HELD THAT THE ASSES SEE WAS ENTITLED TO THE BENEFIT UNDER SECTION 54 OF THE ACT, WHICH DOES NOT EXCLUDE THE RIGHT OF THE ASSESSEE TO CLAIM PROPERTY PURCHASED IN A FOREIGN COUNTRY, IF ALL OTH ER CONDITIONS LAID DOWN IN THE SECTION ARE SATISFIED, MERELY BECAUSE THE PROPERTY ACQUIRED WAS IN A FOREIGN COUN TRY. IT(IT)A NO.2015/BANG/2019 PAGE 6 OF 7 15. AGAIN IN THE CASE OF DR. GIRISH M SHAH (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS TAKEN A VIEW B Y HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT FOR OF HOUSE PROPERTY OUTSIDE INDIA I.E. IN CANADA. 16. HAVING CAREFULLY EXAMINED VARIOUS JUDICIAL PRONOUNCEMENTS AND THE ORDER OF THE ID. CIT(A), WE F IND PT IN THE CASE OF LEENA J. SHAH V. ASSTS. (2006) 6 S OT 72 I (AHD.), THE TRIBUNAL HAS TAKEN A T VIEW THAT THE WOR DS 'IN INDIA' CANNOT BE INSERTED IN SECTION 54F OF THE ACT AND AS PER PLAIN OF SECTION 54F OF THE ACT, THE SALE PROCEE DS OF CAPITAL ASSET SHALL BE INVESTED IN RESIDENTIAL HOUS E OR OUTSIDE INDIA. WE, ACCORDINGLY, FOLLOWING THE JUDGM ENT OF THE HON'BLE APEX COURT IN THE CASE V. VEGETABLE PROD UCTS LTD [1973J 88 ITR 192, HOLD THAT THE VIEW FAVOURABL E TO THE ASSESSEE TAKEN OUS BENCHES OF THE TRIBUNAL SHOULD B E FOLLOWED AND ACCORDINGLY FOLLOWING THE SAME, WE HOL D THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTIO N 54F OF THE ACT. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ID. CIT(A), WHO HAS RIGHTLY ADJUDICATED THE ISSUE IN THE LIGHT OF THE RATIO LAID DOWN BY THE TR IBUNAL IN A NUMBER OF CASES. ACCORDINGLY, THE ORDER OF THE LD . CIT(A) IS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMI SSED. 4. SINCE THE TRIBUNAL HAS TAKEN A VIEW IN SIMILAR S ET OF FACTS, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, FOLLOWING THE SAME, WE HOLD THAT THE A SSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT . THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). WE AC CORDINGLY CONFIRM THE SAME. 10. WE ARE OF THE VIEW THAT IN THE CASE OF ASSESSEE THE DEDUCTION CLAIMED SHOULD BE EXAMINED IN THE PARAMETERS OF SEC TION 54F OF THE ACT IN THE LIGHT OF DECISION CITED BEFORE US. THE AO IS D IRECTED TO APPLY THE RATIO LAID DOWN IN THE AFORESAID DECISION AND ALLOW THE C LAIM OF DEDUCTION OF ASSESSEE IN ACCORDANCE WITH THE LAW, AFTER AFFORDIN G ASSESSEE OPPORTUNITY OF BEING HEARD. IT(IT)A NO.2015/BANG/2019 PAGE 7 OF 7 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JANUARY, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 10 TH JANUARY, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.